Videogame Makers
In this season's blockbuster videogame "Halo 2," players scramble to acquire carbine rifles, needle-spewing guns and other alien weapons for blowing away rivals.
Now, some of the game industry's big guns -- medium-size and large game publishers -- are being stalked themselves, as possible takeover targets.
The prowling for deals comes as production and marketing costs for videogames escalate. The trend is expected to become more pronounced as the $24 billion global industry shifts to a new generation of game consoles in the next year or two. Industry executives and analysts predict spiraling game costs will cause further consolidation.
Electronic Arts' Madden NFL 2005
The world's biggest game publisher, Electronic Arts Inc., stoked such predictions last week when it announced a deal to acquire nearly 20% of the shares in one of Europe's biggest game publishers, Ubisoft Entertainment SA, in a transaction with an estimated value of $85 million to $100 million. Ubisoft's shares jumped 25% the day the purchase was announced.
Executives of Electronic Arts, which has a market value of about $19 billion, were cagey about their intentions in purchasing the shares; the Redwood City, Calif., company is acquiring the stock from a Dutch media-investment firm. But they said the stake could be useful if Ubisoft decides it wants to give up its independence. Ubisoft executives say they consider the move by Electronic Arts hostile, though they won't say whether the company is considering selling itself.
Electronic Arts, responsible for the popular "Madden NFL" and "Lord of the Rings" games, has left little doubt about its broader acquisition plans. "I think you will see consolidation in this business, and we will be a consolidator," rather than be acquired, Electronic Arts Chief Executive Larry Probst recently told an investor conference in New York.
Tobias Crabtree , a portfolio manager at money-management firm Leeb Capital Management Inc. in New York, says the strength of Electronic Arts' balance sheet, with about $2.5 billion in cash and cash equivalents, could easily allow it to make a "sizable acquisition or two." "I anticipate EA trying to make similar deals," says Mr. Crabtree, whose firm has $110 million under management and has been adding modestly to its position in Electronic Arts over the past quarter.
A troll from Electronic Arts' The Lord of the Rings
The upshot is that in the videogame industry, bigger is increasingly becoming better, both in terms of long-term competitiveness and perhaps share-price growth. The largest game publishers, Electronic Arts, Activision Inc. and THQ Inc., have the resources to maintain a broad pallet of games allowing them to weather industry ups and downs better than game makers that depend on the success of just a few titles. Smaller game makers that don't have a deep bench are ripe for being acquired.
Big media and Internet companies also are likely consolidators. Barry Diller's IAC/InterActiveCorp several months ago held talks about a possible acquisition of Activision -- whose portfolio includes "Spider-Man" and the skateboard game "Tony Hawk Underground" -- though the talks between the companies are no longer believed to be active, according to people familiar with the matter. New York-based IAC/InterActiveCorp and Activision, of Santa Monica, Calif., declined to comment. Activision's stock has steadily climbed since October, rising 21 cents to $19.82 as of 4 p.m. yesterday in Nasdaq Stock Market composite trading, not far below its 52-week high of $20.50, reached this month.
Tom Clancy's Splinter Cell, from Ubisoft Entertainment
Viacom Inc.'s board of directors set up a committee earlier this year to review possible acquisitions of videogame companies, including "Mortal Kombat" publisher Midway Games Inc., an independent Chicago company in which New York-based Viacom's CEO, Sumner Redstone, owns a controlling 74% stake. Midway's share price steadily rose earlier this year but was down four cents to $10.74 as of 4 p.m. in New York Stock Exchange composite trading, about the same level as July.
Walt Disney Co., of Burbank, Calif., says it also is hunting for videogame acquisitions, though it looked at Activision and other large publishers and decided they were too expensive.
Meanwhile, British game publisher Eidos PLC, responsible for the "Tomb Raider" series starring Lara Croft, said this year that it was talking to other parties about "possible business combinations." Since its 52-week high in May of $3.40, Eidos shares have plummeted. They were up 3.4% yesterday to $1.52 as of 4 p.m. on the Nasdaq. In Japan, videogame makers such as Namco Ltd. and Capcom Co. are looking more seriously at possible tie-ups and mergers to counter a shrinking local market and long-term financial woes, say Japanese videogame-industry executives.
To date, consolidation in the videogame industry has centered on the largest players buying small game developers that couldn't keep up with rising development costs. Industry executives say those deals will continue apace and mostly will involve established players such as Electronic Arts and THQ, of Calabasas Hills, Calif., picking up closely held game developers in deals worth less than $100 million.
Even large players are feeling the pressure, though, especially with an expected surge in game costs when Japan's Sony Corp. and Microsoft Corp. introduce successors to their PlayStation 2 and Xbox consoles within the next couple years. Development budgets for console games currently can range from $5 million to $10 million, with additional marketing costs, in some cases, close to those amounts. The additional power of the new generation of consoles will require even bigger investments in art and engineering, as much as doubling game costs, some analysts estimate.
Adding to the pressure, games for the new consoles aren't likely to yield much revenue in their first years on the market, since the installed base of machines they can play on will be small in comparison with the current generation of consoles. The upshot: lots of deal discussions throughout the industry. "Even those guys with critical mass are talking to each other" about possible deals, says John G. Taylor, an analyst at Arcadia Investments Inc., a Portland, Ore., investment-research firm that doesn't hold any shares in game companies or offer stock recommendations. Mr. Taylor, who personally owns shares in Electronic Arts and New York-based Take-Two Interactive Software Inc., still thinks there are obstacles to big game deals, such as inconsistent quality in the portfolios of many publishers.
Traditional entertainment companies, such as DreamWorks SKG and Time Warner Inc., have invested heavily in game development in the past, with mostly poor results, according to analysts and industry executives. Many of them, though, attempted to build game studios largely on their own.
Game-industry executives say strong forces are pressuring them to get back into the business, including strong growth for the industry, expected to expand globally at a compound annual rate of 20% for the next four years, according to a study by PricewaterhouseCoopers LLP. Researchers and executives expect the growth in gaming to come at the expense of other traditional forms of entertainment. "You've seen declines in young male viewership of television," says David Zucker, CEO of Midway Games. "They're going somewhere. We know where they're going."
Meanwhile, Microsoft looms with a huge checkbook and an aggressive agenda in games. Since the Redmond, Wash., software giant, which has a market value of about $292 billion, entered the console-videogame market in 2001, its sales have been stifled by a lack of top-tier games for its Xbox game machine. Microsoft got the Xbox titles that have sold well -- both installments of the "Halo" franchise -- through an acquisition of Bungie, a small game-development studio.
Microsoft will come under increasing pressure to fill in the dearth of games as it prepares its next-generation Xbox for sale late next year. One possible target would be Take-Two, the maker of the blockbuster "Grand Theft Auto" series, whose newest versions appear first on Sony's PlayStation 2 game console before they are made available on other machines. The Securities and Exchange Commission a year ago launched an investigation into alleged accounting violations at Take-Two. The company said this month that it made an offer to settle the inquiry. With a market capitalization of $1.54 billion, Take-Two is valued more highly than many investors think Microsoft would be willing to pay for a game maker. But with "Grand Theft Auto" under its own roof, Microsoft could have one of best-selling games of all time for its Xbox and pull the rug from beneath its chief rival, Sony, which has a market capitalization of about $35 billion.
Microsoft also could try buying its way into Japan, one of the largest videogame markets in the world but one where Xbox sales remain anemic. The sheer size of EA makes it an unlikely acquisition candidate for all but the likes of Microsoft -- a hookup that Mr. Crabtree of Leeb Capital Management says he could envision.
电子游戏开发行业掀起整合浪潮
本季畅销电子游戏《最后一战2》(Halo 2)的玩家们都在竞相争夺卡宾枪、喷钉枪和其他奇形怪状的游戏武器，和对手决一死战。
眼下，电子游戏行业的一些巨头们──大中型游戏开发商──也在纷纷装备自己，旨在成为被收购的对象。
电子游戏的开发和营销成本节节攀升的势头愈演愈烈，为眼下此起彼伏的并购交易提供了适宜的环境。再说，未来一、两年新一代游戏机就有望推出，全球市场规模高达240亿美元的电子游戏行业这股整合浪潮只会一浪高过一浪。业内高层管理人士和分析师们都预计，螺旋式上升的游戏成本会促使整合继续深化。
全球最大的电子游戏开发商电子艺界(Electronic Arts Inc.)上周的举动就印证了这个预言。电子艺界宣布收购欧洲大型游戏开发商Ubisoft Entertainment SA近20%股份，交易价值估计为8,500万至1亿美元。Ubisoft当日就飙升25%。
电子艺界市值约为190亿美元。公司管理人士对收购意图含糊其词。电子艺界是从一家荷兰媒体投资公司手中收购这部分股票的，称如果Ubisoft决定放弃自身独立，这部分股票可能就会派上用场了。Ubisoft管理人士认为电子艺界此举属于敌意性质，但不愿明言公司是否愿意出售。
电子艺界发布了闻名遐迩的《Madden NFL》和《指环王》(Lord of the Rings)游戏，毫不讳言自己大举收购的计划。首席执行长拉里?普罗布斯特(Larry Probst)最近在纽约的一个投资者会议上说：“我想大家都会看到电子游戏行业的整合趋势，电子艺界要成为主动的一方”，而不是被收购的对象。
纽约资金管理公司Leeb Capital Management Inc.的投资组合经理克来伯垂(Tobias Crabtree)认为，电子艺界资产负债状况出色，现金及现金等价物约为25亿美元，可以轻松完成一、两项相当规模的收购交易。他预计，电子艺界还会寻机达成类似规模的交易。Leeb Capital Management掌管著1.1亿美元资金，上个季度温和增持了电子艺界的头寸。
结果就是，在电子游戏行业，规模越大就越有利，不论是从长期竞争力还是股价增长潜力来看都是一样。行业三甲电子艺界、Activision Inc.和THQ Inc.手中都有大量游戏资源，可以抵御行业发展进程中的起伏跌宕，而那些只有一、两套游戏获得市场认可的小公司就没那么幸运了。业务不够稳固的小型游戏开发商注定要被收购。
大型媒体和互联网公司可能也会成为电子游戏的整合主动方。知情人士透露，拜瑞?狄勒(Barry Diller)的IAC/InterActiveCorp几个月前曾与Activision协商过收购交易，但现在看来谈判并不热烈。Activision出品的知名系列游戏包括《蜘蛛侠》(Spider-Man)和滑板游戏《托尼霍克地下滑板》(Tony Hawk Underground)。两家公司均拒绝置评。10月份以来，Activision股价持续攀升，周二在那斯达克市场综合交易中上涨21美分，收于19.82美元，与本月创出的52周高点20.50美元相距不远。
维亚康姆(Viacom Inc.)董事会年初成立了一个委员会，负责评估收购电子游戏公司的可行性。收购对象包括推出了《魔宫帝国》(Mortal Kombat)的芝加哥独立游戏开发商Midway Games Inc.，维亚康姆首席执行长萨默?雷石东(Sumner Redstone)控股该公司，持有74%股份。年初，Midway股价稳步上升，但至本周二收盘已经跌至10.74美元，与7月份股价大致持平。
沃尔特-迪斯尼(Walt Disney Co.)表示自己也有意收购电子游戏开发商，不过Activision和其他大型开发商在迪斯尼眼中过于昂贵了。
此外，英国电子游戏开发商Eidos PLC今年也曾透露，与其他方面协商过“业务整合的可能性”。以劳拉?克劳夫特(Lara Croft)为主角的《古墓丽影》(Tomb Raider)系列就是该公司的杰作。Eidos股价在5月份创出52周高点3.40美分，然后一路下滑。周二涨3.4%至1.52美元。日本的业内管理人士也透露，Namco Ltd.和Capcom Co.等电子游戏开发商也更加认真地考虑合作或者合并，以此抵御国内市场萎缩和长期财务危机。
迄今为止，业内人士整合的焦点一直是大型公司收购无力应对开发成本上涨的小型公司。业内管理人士认为，这类交易还会继续快速发展，以电子艺界和THQ等实力雄厚的公司为主，收购对象主要是交易额不足1亿美元的未上市游戏开发商。
不过，即使大型开发商也感受到越来越重的压力，尤其是当索尼(Sony Corp.)和微软(Microsoft Corp.)在这一、两年推出新一代Playstation和Xbox游戏机后，预计游戏成本还会继续攀升。针对这类游戏机的游戏开发成本目前是500万至1,000万美元，还要加上有时并不亚于开发成本的营销费用。新款游戏机会有更强大的功能，就要求开发商在新游戏的艺术效果和设计方面投入更多资金。一些分析师估算，这笔资金可能高达游戏成本的两倍。
另外的压力就是，面向新游戏机的游戏在推向市场的第一年不太可能获取多少收入，因为和现在的游戏机相比，它们能够安装的游戏机数量还很少。结果就是，全行业上上下下都在探讨并购交易的可能性。波特兰投资研究公司Arcadia Investments Inc.分析师泰勒(John G. Taylor)说，即使拥有大量用户群的游戏开发商也会商谈达成并购交易的可能性。Arcadia Investments不持有任何电子游戏类股，也不提供选股建议。泰勒自己持有电子艺界和Take-Two Interactive Software Inc.的股票。他认为，达成大规模并购交易仍然障碍重重，比如说许多开发商的产品组合质量互不匹配。
分析师和业内人士称，DreamWorks SKG和时代华纳(Time Warner Inc.)等传统娱乐业公司曾经向游戏市场投入巨资，但基本都是黯然收场。不过，它们大多数是计划兴建自己的游戏工作室。
电子游戏行业的管理人士称，几股强大的力量使他们深深陷入到这个行业，包括整个行业的快速增长势头。普华永道(PricewaterhouseCoopers LLP)最近的研究表明，未来4年全球电子游戏行业综合年增长率将达到20%。研究人员和企业管理人士认为，电子游戏行业的增长会以其他娱乐行业的萎缩为代价。Midway Games首席执行长大卫?朱克(David Zucker)说，“年轻人看电视的时间已经越来越少了，这段时间总要打发，而我们知道他们会做什么。”
此外，微软坐拥巨额资金，也制定了一份雄心勃勃的电子游戏业务发展计划。自从这家市值2,920亿美元的软件巨头2001年携Xbox进军游戏机市场以来，缺少兼容的高端游戏一直阻碍著这项业务的发展。在微软收购了小型游戏开发工作室Bungie之后，Xbox的销售略有起色。
微软计划明年下半年推出新一代Xbox游戏机，这样解决游戏种类匮乏的压力也越来越大。一个可能的收购目标就是推出了畅销的《侠盗猎车》(Grand Theft Auto)系列游戏的Take-Two，最新款《侠盗猎车》已率先在索尼的PlayStation 2上运行。一年前，美国证券交易委员会(Securities and Exchange Commission)开始对Take-Two的会计违规行为展开调查，该公司本月表示已经提出了和解条件。Take-Two市值约为15.4亿美元，不少投资者认为微软不会愿意出这样的高价来收购。可是，一旦将《侠盗猎车》收归旗下，Xbox将会拥有历来最畅销的一款游戏，并给市值约350亿美元的老对头索尼公司以沉重打击。
微软还有可能通过收购进军日本市场，这是全球最大的电子游戏市场，可Xbox在日本的销售情况一直低迷不振。电子艺界的庞大规模使得微软以外的公司都无力收购，Leeb Capital Management的克来伯垂说，这是他能够想像的一种联盟。
